Sunday, March 13, 2016

SCAMAZON – Amazon “Kindle Unlimited” Scammers Netting Millions

How are scammers making millions off Amazon? (And off any author enrolled in Amazon’s KDP Select program?)

It’s easy. So say digital entrepreneursscammers like Dave Koziel – who admits to outsourcing his material, he’s not an actual writer or anything. You see, all you have to do it just upload "books" stuffed to the gills with anything, even unrelated material (romance books, cookbooks, South Beach diet books, foreign language texts, any and everything you’ve got at your disposal) then use a click-bait link at the front of the book (something like “Click here to win a Kindle Fire!”) to take the reader directly to the very back. A German blog has detailed these tactics as well, although it seems the German Amazon store (much smaller than the U.S. one) is cracking down on this now.

Why does this method result in big bucks? Because of how Amazon has changed the way it pays authors enrolled in KDP Select. Authors know that when Kindle Unlimited was first launched (rather quickly and in direct response to other book subscription services that were just popping up like Scribd and Oyster) we were paid “by the borrow.” It was similar to a sale (on sales, we were paid 70% of list cost) except now we were paid out of a general fund instead of a set percentage. (Like a “pot” or “kitty” – a communal pool of money – except in this case, Amazon was the only contributor and authors the recepients.)

But Amazon changed that payment method from “per borrow” to “pages read.” Not pages written, mind you – but how many pages a reader actually reads.

Except, the problem with this method that’s recently come, shockingly, to light, is that there’s a loophole in the system. Apparently, if you put a link at the beginning of your book to the very back and a reader clicks it – the author is paid for all those pages. A full read. Even though a reader just skipped over them.

Except Amazon didn’t want us to know one important thing – they lied to us.

They have no idea how many pages a reader actually reads.

Let me say that again, just so you don’t miss it:

AMAZON HAS NO IDEA HOW MANY PAGES A READER ACTUALLY READS.

Wow. A little bit of karma coming back at you with these scammers, Jeff Bezos?

Because Amazon has been scamming authors in the KDP Select program all along.

They decided to pay us by “pages” read, when in fact, they can’t count actual pages read, and they can’t time how long a reader actually takes to read those pages (last time I checked, no one could read 3000 pages in less than two minutes…)

Oh, they can email me and my publishing company that I’m missing a “page break” at the end of my novel, or threaten to take my book off sale or label it problematic for typos (that may or may not actually be typos), or actually take my book off sale (which they recently did - Bear Necessities - just after a great freebie run, too, while it was on sale for $0.99 - thanks, Amazon!) because I provided bonus content in the front of a book instead of at the back – but they can’t actually count how many pages a reader reads in a book.

Yet… this is how they have decided to pay authors. Per page read.

See anything wrong with this picture?

I sure do – and it smells like fraud and class-action lawsuits to me.

How do I know Amazon can’t count how many pages a reader reads?

Because, if Amazon had a way to count how many pages a reader actually reads, a link at the front of the book that took the reader to the very back would result in two pages read.

Just two, not every single page in the book.

But as Dave Koziel and company have proven, that’s not what’s happening. There’s a little loophole in Amazon’s system. When a reader clicks a link at the front of a book that takes them to the end of a 3000 page “book” – it gives that author 3000 “pages read.” Not just two.

If Amazon had a way to count how many pages a reader actually reads, placement of the TOC (table of contents) at the front or back of the document would be irrelevant.

But as this post proves (and man, do I feel awful for author Walter Jon Williams– he’s out a hella lot of money because of Amazon’s knee-jerk reactions and lack of planning and forethought) Amazon has suddenly begun removing books with a TOC at the back of the book from sale. As usual, they decided to shoot first and ask questions later, and damaged legitimate authors in the process, as David Gaughran first pointed out.

If Amazon had a way to count how many pages a reader actually reads, placement of “bonus material” (an extra story or book along with the original source material, which many authors have started to do, including myself in the Kindle Unlimited program) would be irrelevant. You could put it at the front or back of the book, and it wouldn’t matter, because the table of contents tells the reader what’s where, right?

Except the truth is, Amazon is showing us through their actions – their cap on KENPC, their insistence that the TOC needs to be at the front of a book, and their recent email to me about “bonus” content not being allowed at the front of a book – that they have no idea how many pages are being read in any given book.

All they know is where a reader STOPS reading.

That’s all they can actually calculate.

That’s why a TOC needs to be at the front (because TOC defaults as the “start” point of a book, and if it’s at the back and a reader goes to the TOC, an author has just been given credit for a full read even if the reader didn’t read the book) and why they are no longer allowing “bonus” content at the front of a book.

Oh, and in case you’re wondering, there are legitimate, non-scammy reasons to put a TOC at the back or bonus material at the front. The TOC (especially if a book is long or a boxed set) takes up valuable real estate in the “Look Inside” feature or “Sample” on Amazon. Placing it at the back avoids that issue.

And the logic behind putting “bonus” material at the front?

Well, this is how I explained it to Amazon in my letter to them:

I had a very legitimate reason for putting the bonus book/content at the front of this title.

The last time I put a bonus book at the end of the book, I had reviews complaining that the original title ended at "50%" - and they thought it was much longer, because the bonus book was taking up real estate at the back of the original text.

In this case, I put the bonus book up front (and labeled it clearly on the title page and in the table of contents) so that when the reader finished the main book, it would be near 100% and they would understand they'd reached the end, and wouldn't feel "cheated” or “ripped off.”

It's easy to look at a Table of Contents (TOC) and navigate to the book they purchased.

You see, I was under the assumption that, since Amazon is paying us by PAGES READ, that you, at Amazon, actually had a way of knowing HOW MANY PAGES A READER ACTUALLY READ.

I assumed, since it would be fraudulent otherwise, per our contract in publishing with you, that since you were paying us by pages read, if a reader skipped over a book in the table of contents, we wouldn't actually be paid for those pages. So that putting bonus content at the beginning of a book would be no big deal, no harm, no foul.

Apparently, that isn't the case. And you never told us that. As a matter of fact, you, personally, (rep’s name redacted), lied to me and said that skipping to the end of a book would NOT result in a full-read. We emailed about this and talked about it on the phone when KU 1.0 was originally rolled out, and you assured me that yes, Amazon had a way of tracking the pages a reader actually read, with time spent on each page.

Turns out, Amazon hasn't been able to correctly count pages read since the very beginning, even though that's exactly how you're paying us.

If you think this isn't fraud, and that there aren't authors out there already talking about a class action lawsuit, you'd be very, very wrong. There are a lot of wealthy authors out there who are beyond furious about this new information.

I suggest you plug this leak as fast as you can and make some apologies and remuneration for it.

And restore my book to published status immediately - and its rank as well, since you took it off-sale for a reason that shouldn't have been a problem or caused an issue if you hadn't lied to authors about your ability to actually count the pages you were oh-so-generously paying us less than half-a-penny for.

On my part, it was completely unintentional. I was directly told that skipping over content in a book would not result in pages read. But that was clearly a lie. I thought I was creating a better customer experience (kind of like Walter Jon Williams and his TOC placement) when in fact I was unknowingly using a tactic commonly utilized by scammers.

Unfortunately, it’s not the only scammer tactic I unwittingly adopted.

You see, I have a link at the front of my books in my table of contents (I happen to place my TOC up front, so I dodged that particular bullet) that leads to the back and a link to sign up to my mailing list. I incentivize signing up to the list by offering readers five free reads. I’ve been doing this for years.

The thing is, I had no idea that doing this resulted in a full read in Kindle Unlimited. Because Amazon specifically told me directly that “skipping pages” wouldn’t work – that they could count pages read – and linking to the back page would not result in a full read!

I've been "cheating" and didn't even know it was cheating. I wasn't complicit in a scam but I'll sure be blamed for it if they shoot first and ask questions later. (And as we know, they usually do…) Especially since I write erotica and I’m Selena Kitt. I’m guilty already by default. :P

The problem is, Amazon has been throwing the baby out with the bathwater by taking books off sale for having a TOC at the back of the book, or bonus content in the front. As David Gaughran first pointed out, real authors are being hurt by Amazon’s attempts to plug up a leak that shouldn’t have existed in the first place.

And I'm afraid it isn't going to end there, folks.

Are links from the front of the book to the very back going to be next in Amazon’s line of fire? Could be.

The irony is, many people do what I do – put a link in the TOC to a mailing list with a free read to sign up. Many of those originally had their TOC at the back of their books – but now Amazon is forcing them to put their TOC at the front. In effect, forcing them to have a link now at the front of their book to their mailing list… which leads the back of their book, and would result in a “full read” if a reader clicks that link.

Doh.

I don’t know how Amazon will plug this particular loophole, but I know what I’m doing this week. *sigh* Time to reformat my Kindle Unlimited books and take out the link to free content at the back and put that content somewhere up front. It’s not “WIN A KINDLE FIRE” click-bait – it’s a legitimate offer – but I’m sure Amazon will see it differently.

It’s better to get out the way of a potential nuclear explosion if you know it’s coming than sit around and wait for it to happen – at least that’s my philosophy. And the best predictor of future behavior is past behavior. So if Amazon’s reaction to this KU 2.0 problem so far is any indication, I’d suggest you follow my lead and clean up those “links to the back of the book” now before they nuke your stuff.

The thing is, all of this cleanup was preventable. There was no reason to implement such a flawed program like Kindle Unlimited in the first place. Amazon certainly could have predicted the original “loophole” in KU 1.0 that they attempted to close with KU 2.0.

Remember when short books were all the rage in KU 1.0? That was because every borrow that was read to 10% paid out around $1.30 each (well, at last count, the amount kept going down every month…) Erotica writers were hit hard when Amazon switched to the “paid per page read” scenario, because erotica authors have always written in short-form. What we were once being paid $2.09 (70% of $2.99) per sale for before Kindle Unlimited came along, then $1.30 per borrow for in KU 1.0, we were then being paid about $0.15 per read-through for in KU 2.0.

Ouch.

But the real scammers in KU 1.0 weren’t erotica authors, who simply benefited from the per-borrow payout by doing what we’d always done (writing short stories) – the real scammers put gibberish inside a book and made them so short that by simply opening the book on your Kindle, that first page would count as 10% of the book and result in a paid borrow.

Cha-ching!

Are you telling me Amazon couldn’t have foreseen that?

If so, I have some swampland in Florida to sell you.

Then KU 2.0 came along to “fix” the issues/loopholes/leaks of the “scamphlets” in KU 1.0. Amazon went to a “pay per pages read” scenario. It’s ironic that their solution to the money they were bleeding in the first Kindle Unlimited version was increased exponentially in the next one.

In KU 2.0, they weren’t paying out $1.30 a borrow to scammers who created their little “scamplets” and borrowed them in their little circles anymore. (Or to those nasty erotica writers who’ve always written shorts stories for readers who want to buy them… they clearly deserved to be punished for their dirty minds and “selling sex” in the first place, right?)

That’s great, but… before the KENPC cap was very recently instituted, the pages you could get paid for per-read were unlimited. Which meant that anyone could release a “book” of unlimited length in KDP Select (these scammers are putting garbage in their books – foreign translations, articles from Wikipedia, just words for words’ sake) then put a link at the front of that book that jumped to the back – and voila. A $100 download in one click. I'm not kidding. I know authors who have told me they've seen these scammers bragging about getting that much per-read before the KENPC cap.

Even when they put the KENPC cap of 3000 on it, with the payout last month at $0.0041 per page read, that meant the maximum payout was $12.30 per download. Still not too shabby. Especially if you have lots of scammer friends to borrow your book and just click a link to read to the end - and push up your rank in the process.

Guess you should have just continued paying out for those dirty erotica shorts, Amazon… :P

Amazon’s continued “fix” to these problems are like putting a Band-Aid on a bleeding artery. Because guys like Dave Koziel aren’t just making money off Amazon. He’s making money off selling this method to other scammers and telling them how to make money scamming, too. And the more they scam, the more money they take out of the “pot."

Check this link out. Apparently a 15-year-old mentee of Dave Koziel made $64,000 in a month. That's not a typo.

Do I think this kid wrote all those words? Not if he's following Dave's advice, he's not.

I'm posting a screen shot here, just in case the link gets removed. (You never know...)

Quoted on those images, Dave Koziel says: "A screen shot I got earlier from my mentee and coaching student @justin8600 For those of you who don't know what this is it's a report from Amazon that shows you your actual royalty payments from the Kindle store. Take a close look at these numbers and you'll see how much money he is actually getting paid this month from Amazon. Did I mention he's only 15? A lot of you may look at this and think it's fake. How can a 15 year old possibly make $70,000+ in a month online from selling ebooks on Amazon? The world is changing and fast. Opportunities are out there to make money and a lot of it! It doesn't matter how old you are, where you came from, what your circumstances are etc."

Authors and readers – does this make you angry? It should. You’ve been lied to and cheated, not just by the scammers, but by Amazon. Primarily Amazon, really. Scammers suck, but we all know they’re exploiting a loophole that was created by Amazon's short-sightedness and could have been prevented by Amazon in the first place. The scammers are scammers - and they're providing a poor customer experience to be sure - but Amazon bears the brunt of the blame here, let's not lose sight of that.

If Amazon’s focus is “customer-centric” then their Kindle Unlimited program is a giant fail. KU 1.0 was called “Kink Unlimited” because authors (many who hadn’t started out writing erotica) jumped on the erotica shorts bandwagon and the market was flooded with them.

But KU 2.0 is now being called “Krap Unlimited” because of all of these crappy scam-books that claim to have great content, but really only contain a bunch of garbage and a click-bait link up front to take readers to the end, so the “author” of the book can get paid for all of those pages.

And when readers find these word-salad books, do they think, “Oh geez, a scammer, what a jerk?” No. They think, “Welp, everything they say about self-publishing and indies is true – their books suck!”

Thanks, Amazon, for perpetuating that myth.

And while the readers have to wade through crap (and boy, do they – I thought keyword stuffed titles weren’t allowed, Amazon?) authors are getting hit the hardest under KU 2.0. Not only are we getting paid less than half a cent per-word-read, these junk-books are forcing legitimate authors to split the “global fund”/pot with them. The rate we’re being paid per page just keeps dropping.

Gee, I wonder why?

Let’s take a look, shall we:

-6.32% = December rate decrease

-10.72% = January rate decrease

We can thank the scammers for that.

And here are some more numbers for you.

Amazon claimed recently that pages read were up by 25%. But I know that I didn’t see a pages-read increase of 25%. Did you? I bet you didn’t. Want to know why?

Because those pages read were click-bait scammer reads, that’s why.

I can’t prove it – but other authors have speculated as much, and I believe they’re right.

Take a look at this graph. (Courtesy of my author friend, Michelle Keep - she's awesome BTW, smart as a whip, and writes great books - and provides amazing services to authors - check her out!)

Before November 2015, the pages-read increased steadily for months by about 100 million-ish a month.

Then, in November 2015, there was a 350 million pages-read increase from the previous month. A pretty sharp increase but we’d seen increases similar to it before from December to January the year before.

Then, between December and January, look at the huge rise. There were 700 million more pages read in that month. How do we explain that? Christmas rush? Hm. Maybe.

Historically speaking, though, the program increases pretty steadily on that graph – but it started spiking in November and continued to climb drastically—far more than it ever had before—in December and January.

Let's look at the actual numbers.

From November 2015 to December 2015, the pages-read increased by 347,751,042. (about 350 million)

From December 2015 to January 2016, the pages read increased by 716,220,032. (about 700 million)

Can Kindlemas account for this gigantic rise? Can we just chalk it up to Christmas growth?

Well, let’s look at the year before:

December 2014 shows 1,154,321,678 pages read. (1.1 billion)

January 2015 shows 1,402,376,812 pages read. (1.4 billion)

Between December 2014 and January 2015, that’s an increase of only 248,055,134. (about 250 million)

That’s about 1/3 of the increase we saw between December 2015 and January of 2016 (which was an increase of 716,220,032 – about 700 million)

Historically speaking, this giant increase is suspect.

So let’s go back and look at this year’s dramatic jump.

December 2015: 2,929,051,855 pages read (2.9 billion)

January 2016: 3,645,271,887 pages read (3.6 billion)

If we add those two numbers we get: 6,574,323,742 (6.5 billion) pages read

Now, just for chucks and giggles, let's subtract the “average” historical Christmas/Kindlemas jump (which last year we saw was about 250 million…) from that total. Or, hell, let's go a little further, let's add to that historical average and say we should have historically seen about a 300 million pages-read increase from Dec 2015-Jan 2016…

If we do that, we're left with a 763,971,074 difference.

There's that shocking, inexplicable 750 million pages-read increase.

For speculation’s sake, let’s say that huge page-read increase is actually the result of scammers. Just for argument's sake, let’s say they’re the ones who have caused this dramatic rise in pages read.

If you translate those pages-read into dollars (multiplying it by the last known pages-read amount Amazon paid out, which was $0.0041 per page)… that comes to…

About 3.1 million dollars.

That’s a lot of money. :o

Okay, I get it, I hear you - that maybe it's an exaggeration. Maybe Amazon did have a big jump in program growth this year, because they were pushing Kindle Unlimited around Christmas time and offering discounts. Okay, that's possible.

So let's account for that. Even if natural growth increased enormously this year – what if scammers accounted for just 1/3 of that 750 million increase in pages-read?

That’s still a million dollars out of the pot.

But that's not all, folks.

No, because not only are these scammers stealing money out of my pocket and every author’s pocket who participates in the KDP Select program, they are getting “All-Star” bonuses on top of it. Just to add a little insult to injury and rub some salt in those wounds.

And Amazon could have prevented all of this. They could have anticipated all of these issues - just as they could have anticipated the problem of erotica surfacing on children's Kindles and done something proactive and preemptive about that. But Amazon works like the pharmaceutical companies. They make a lot more money ignoring root causes and treating symptoms.

The question now is - what are they going to do about it? And is it going to hurt?

I'm afraid the answer to the latter question is "yes." As to the former one? Well, they'll treat the symptoms again, I'm sure. They've already screwed over legitimate authors claiming they now have TOC and bonus content issues in their books, whether Amazon was aiming at the scammers or not. We're collateral damage, as usual.

And frankly, I'm beyond angry. I'm appalled. I've become an unwitting participant in this "scam," because Amazon lied to me. Amazon informed me in no uncertain terms that skipping over content in book would not result in pages-read, but they lied.

How can I ever trust them again? How can you?

Whatever trust I did have (ha) has been completely decimated. I don't even trust their royalty reports at this point.

And you know what really sucks? Thanks to Amazon's deception, I've been cheating other authors without realizing it. I suppose, if I were in the Hunger Games (which is exactly what this whole thing feels like) I'd just end up dead. I don't have the stomach for this sort of zero-sum competition they've set up in KDP Select between authors. But like Katniss, I don't have a lot of choice, if I want to feed my family.

In the end, the worst thing of all, at least for me, is Amazon's stranglehold on the market. They've forced me into this horrible, socialist program of theirs where it is a zero-sum game - and I have to fight or die.

If you want to make a living at this, Amazon has created an environment where we're all getting in the same bread line and fighting each other for crumbs. We're all hungry. And getting skinnier every day.

(And OMG if one person in the comments says, "You're not 'forced' into the program! You have a 'choice!'" I will delete you so fast it will make your head spin like Linda Blair. We'll talk about Amazon's algorithms and how they weigh the visibility of KDP Select and the decreasing ability to make a living on any other vendor some other time, okay?)

Authors - when we were actually selling books, did we feel we were "cheating" each other out of dollars? Nope. Because we knew there was (arguably) an unlimited amount of dollars to be had. Competition in the marketplace is great - that's good for the ecosystem. But competition for a "pot" of something?

That way lies... this madness.

And that's all on Amazon.

They created this KDP Select monster. And remember that their whole company is run at a loss. In effect, Amazon is being subsidized by their shareholders. Authors keep complaining about Nook and Apple and Kobo and want to know why no other retailer is challenging Amazon for marketshare?

The real answer is, because they can't afford to - they aren't being subsidized.

It would be a good idea to check when KU was extended to other countries than US. It is a fairly recent scheme outside US so that part of the increase between Dec 2015 and Jan 2016 could be explained by people in other countries suddenly borrowing ebooks (especially during the Christmas period when many people have reported an increase in sales). Now if really a link on the first page leading to the last one can defeat Amazon algorithm they will surely take action. On the other hand if Amazon cannot know how much pages one reads then how can it know that a link on page one leading to page 10000 must be counted as 10000?